intended to issue a digital currency as soon as possible, the central
bank said Wednesday, a move that could help the yuan offset the global
dominance of the US dollar and limit capital outflows.
In a statement summarising the forum and posted on its website, the bank
said the currency could reduce the costs involved in circulating
banknotes, facilitate economic activities and help combat
A virtual currency would also help the bank improve control of the money
supply and payment efficiency, it added
Taking the step would thrust China into largely uncharted waters.
Ecuador last year became the first nation to issue state-backed digital
money. All of the banks in the tiny South American country have been
told to get behind the push.
Hao Hong, chief China strategist at the Bank of Communications, said
China’s attitude towards digital currency had been shifting.
The central government came out sharply against Bitcoin in 2013,
forbidding payment companies from accepting it. It later relented
somewhat, and allowed Bitcoin exchanges, but banks must still give it
“The attitude towards digital currency in China has been shifting, it
has been surprising,” Hong said. Back then it was quite hostile. Now,
facing capital outflow pressure, a digital currency would make it easier
to check the capital flow.”
State-backed cryptocurrency would also allow the yuan to challenge the
hegemony of the greenback, he said, but cautioned that would take time.
“The US dollar has the luxury of pricing everything, every commodity, in
US dollars. That is why it can maintain a power grip on the global
PBOC chairman Zhou Xiaochuan, who attended the forum in Beijing, floated
the idea of an alternative to the American dollar in 2009, saying it
could be a “super-sovereign” currency based on the reserve asset of the
International Monetary Funds. The IMF announced the renminbi would take
its place alongside the US dollar, the yen, the British pound and the
euro that comprise the special drawing rights basket.
But Ben Bernanke, the former US Fed chairman, told a forum in Hong Kong
this week that Beijing’s interest in creating an alternative to the
greenback wouldn’t work.
But a digital currency could gain traction at the domestic level.
Payments for goods and services are increasingly becoming digital with
new applications and online players jostling for a position in the
potentially lucrative sector.
Zhang Weichao, the director of “mining” at Huobi.com, China’s major
platform for virtual currency trading, said a cryptocurrency might be
popular with consumers. “It can be popular among the people – [if] it’s
endorsed by the government and convenient to use with new technologies.”